Tourism Minister David Allen yesterday defended his decision to offer hotel concessions in a bid to boost the plummeting holiday trade in Bermuda.

He addressed members of Hamilton Rotary Club, where just three weeks ago he was accused of "throwing money down a rat hole'' by then speaker former CEO Robert Stewart.

In a scathing attack on the Government Minister, Mr. Stewart, the former head of Shell Company in Bermuda, said it was the "height of folly'' to take cash from the taxpayers and use it to line the pockets of hotel owners.

He said if the tourism business was viable on the Island, hotel owners would not need an incentive to come here.

But yesterday, at the Rotarians' weekly meeting at the Royal Bermuda Yacht Club in Hamilton, Mr. Allen said Bermuda had to do everything in its power to make the Island the number holiday destination.

And he said working with the hotel and accommodation industry and offering incentives for them to develop and invest here would reap major rewards.

Government unveiled its wide-ranging tax breaks for existing hotels that re-develop or owners interested in setting up here.

The incentives may include land and occupancy tax exemptions, relief on Customs duty for building materials and alcohol, and less Government red tape.

And one of the first to reap the benefits could be Rosewood Hotels, who could be the new operators of the defunct Marriott Castle Harbour Hotel, which is planned to be demolished and re-built.

He said: "In one fell swoop, this watershed legislation has taken giant steps towards putting Bermuda back on a level playing field for hotel investment.

"If we don't encourage hotels to invest in Bermuda they will go to other Islands where they can invest in their hotels over there.

"We have to jump start the hotel industry and, indeed, the whole economy, with the ripple effect it has on it.

"I think the absolute folly would be us sitting here with our heads in the sand. "The alternative to such creative, ground-braking legislation as the Hotel Concessions Act 2000 is too appalling to contemplate.

"It would be an industry continuing to wind down without significant new investment, and potentially thousands of Bermudian hotel workers unemployed, with all the ripple effects on our economy that implies.'' He said between 20 and 40 years ago Bermuda was the role model to other holiday destinations, attracting tourism delegations from the Caribbean who wanted to emulate it.

"But, you know what, Bermuda stopped being the innovator, the trend-setter,'' he added.

"Around the late 1970s and early 1980s, it grew complacent, letting the `I'm alright Jack' syndrome set in. We were overtaken by competitors who not only copied us, but learned how to do it better. "Bermuda failed to re-invent itself -- as every place -- and business -- must do constantly if it is not to be left behind.

"That doesn't mean change for change's sake, but it does mean separating ourselves from the pack and staying ahead of it.'' Asked by one of the Rotarians whether he would consider allowing just one big casino to open up on the Island to help entice tourists, Mr. Allen gave an emphatic "no''.

He said he and Government were strictly opposed to gambling and did not believe that allowing casinos would boost the holiday trade.

He said: "We must never become another stop on the turnpike. We must be unique.

"Antigua brought in gambling and tourism continued to go down.

"Bermuda has so much going for it -- we should never sell ourselves short.

Gambling is the quick fix. It would be easy for me to bring in gambling and unlimited cruise ships, but that is not the answer.'' And the Minister also said he wished to see more holidaymakers coming to the Island from Europe and hoped to eventually see direct flights from the likes of Germany.